Thursday, February 26, 2009

Social Entrepreneurism: Am I The Only One Who's Getting Confused?

The concept of social entrepreneurship has been around for awhile now (at least to my knowledge, when I first heard about it back in 2000), but it’s surprising to me how confused many are about what that term means. Most of us assume it’s an approach to “doing good” by using more business-like tactics such as benchmarking, being more “results-oriented,” using sophisticated financing strategies, and streamlining operations to ensure cost-efficiency.

So far, so good. I, personally and wholeheartedly support all of that and, frankly, have never really understood those who reject business-like approaches out of hand when some have proven to be quite effective in helping to strengthen nonprofits’ work and operations. And there are nonprofits that could benefit from then because, let’s face it, times have changed in ways that’s expecting from and demanding more of organizations—in no matter what sector they function.

At the same time, I’ve noticed that this term seems to have recently become as overused as “empowerment” and “paradigm” once were. Perhaps it’s because, young leaders tend to embrace this concept, which has been part of their vocabulary from the get-go. Or, perhaps it’s because the Obama administration seems to be interested it. Or, perhaps it’s because those in the business sector are more comfortable with being “entrepreneurs” than they are with being “nonprofit leaders.” Who knows?

All I know is that it’s making me a bit uncomfortable because the overuse of the term seems to be contributing to some tension in the nonprofit sector. Specifically, some folks have expressed their belief that there is relatively small—but growing—group of individuals and organizations being labeled as “social entrepreneurs” who don’t necessarily seem to fit the definition (or at least what is the most commonly held definition). As Rick Cohen outlines in a provocative article (that states publicly what many have thought or groused about privately), some of the organizations commonly touted as poster children for social entrepreneurship get a considerable amount of their funding from the federal government.

That’s ok, if one believes that an important part of being an entrepreneur is the ability to attract financing—whatever the source—for one’s cause or organization. But to many, “entrepreneurship” connotes something different: innovation that stems from and subsists on a more lean and mean model that derives much of its financing from earned income or profit-making enterprises. To them, an important measure of the entrepreneurial capacity of an organization might be its ability to subsist if its federal subsidies disappeared tomorrow. What better test of entrepreneurial ability is being able to quickly secure new sources of support and ensure the organization’s existence in the face of an enormous financial gap? As Giorgio Armani (a fashionable entrepreneur—we could use more of those!) recently said in the New York Times, “An entrepreneur shows his true colors in a period of crisis, not in a period when everybody is having success.” Indeed.

Others argue that social entrepreneurs have been around since the early days of the sector, pointing to individuals who conceived of and then launched what have since become some of the country’s most successful nonprofits such as Habitat for Humanity, Share Our Strength, Planned Parenthood, and many others. Is there a different between them and today’s social entrepreneurs?

And there are still others who think that just because groups are “more traditional,” that doesn’t necessarily mean they’re irrelevant or less entrepreneurial. As one nonprofit leader recently said to me, “We’re a ‘mature’ organization, but we still continue to pump new products and ideas into our system. Innovative ideas still need strong delivery systems, and that’s a role we can play well.”

And, finally there are some who take issue with the assertion that the efforts of organizations deemed to be socially entrepreneurial have become more efficient and effective organizations. What does effective mean, exactly? The ability to raise more money? To provide more services (and usually those that are concrete, direct services that can be easier to measure and seen as "outputs")? To move policy through advocacy (something that, arguably, may be the most powerful indicator of "effectiveness" but that is still relatively overlooked by social entrepreneurs and/or those who assess them because it's difficult to measure)? To go beyond their focus to help change the larger communities in which they operate by building a larger sense of social efficacy (through which communities are able to grapple with any issues that face them -- not just those on which the nonprofit focuses)?

And who’s to say that the same groups that are seen as entrepreneurial today won’t end up to be as bureaucratic, ossified, and/or sluggish as those they’re trying to distinguish themselves from? After all, we don’t have a lot of hard data about the longer-term performance, outcomes, or impact about these (or any, for that matter) organizations.

What’s clear is that it may be time for some clarity around this whole concept so that we can test it more rigorously and determine which of its components works best for broader incorporation into other nonprofit practices and functions. At the very least, can we please stop overusing the term?

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